In this Client Briefing, we present an assessment of three pay-for-performance methodologies: Realizable, Summary Compensation Table, and ROX, Exequity’s preferred methodology. In assessing how well executive compensation and shareholder returns align under each analysis, we illuminate the key shortcomings of Realizable pay (as defined by The Conference Board) and Summary Compensation Table pay (as used by proxy advisors). Using ROX, we find that executive compensation at S&P 500 companies is very strongly aligned with returns to shareholders. We also find that Realizable pay and Summary Compensation Table pay align relatively poorly with shareholder returns, resulting in pay-for-performance “disconnects” where under ROX none may exist. ROX provides compensation committees a powerful, comprehensive, and reliable tool to illustrate the link between executive pay and performance.
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